MOSCOW (MRC) -- Rosneft is selling its three southern oil assets and could complete deals for all three by the end of May, sources told Reuters, as Russia's top oil company shifts focus to the giant northern Vostok Oil project.
Vostok Oil, in which global commodities trader Trafigura has a 10% stake, is one of Russia's biggest oil projects, comparable in size with the exploration of West Siberia in the 1970s or the US Bakken oil province over the past decade.
Rosneft was selling its southern Stavropolneftegaz, Ingushneft and Dagneft with combined oil output of about 1 million tonnes per year, a fraction of the 205 million tonnes it pumped in 2020 (4.1 million barrels per day), four industry sources familiar with talks said.
Cengeo, a private Russian company which focuses on mature oil fields, has already bought a 51% stake in Ingushneft and was expected to buy Stavropolneftegaz and Dagneft by the end of May, two sources said.
Rosneft and Cengeo did not respond to requests for comment from Reuters.
Rosneft has previously estimated that Vostok Oil, which will start production later this decade, would require more than 10 trillion roubles (USD135 billion) in investments.
After a call with Rosneft, several analysts had said last year Rosneft planned to sell some 'brownfields', or mature assets, in southern Russia, along with underperforming brownfields elsewhere, to raise capital to develop Vostok Oil.
Crude oil from Stavropolneftegaz, Ingushneft and Dagneft is exported via Caspian Pipeline Consortium (CPC) system, in which Rosneft holds a minority stake. CPC pipeline ships Kazakh and Russian oil to the Black Sea.
After the sale, Rosneft is expected to keep exports of gas condensate via CPC at least until the end of 2021, sources said.
A joint venture between Rosneft and Royal Dutch Shell owns a 7.5% stake in CPC and there are no plans to sell it for now, sources added. CPC declined to comment.
As MRC wrote previously, in February 2021, Rosneft Oil Company and BP signed a Strategic Collaboration Agreement focused on supporting carbon management and sustainability activities of both companies. The agreement builds on years of partnership between the two companies and formalises key elements of their collaboration on sustainability and work to identify carbon reduction activities and low carbon opportunities.
We remind that in late January 2020, Russian oil producer Rosneft said that its German subsidiary Rosneft Deutschland GmbH had completed the deal to acquire a 3.57% stake in Germany’s Bayernoil Raffineriegesellschaft mbH from BP.
We also remind that a fire at Ufaorgsintez (a subsidiary of ANK Bashneft, part of PJSC "NK Rosneft") did not lead to a shutdown of low density polyethylene (LDPE) and polypropylene (PP) production capacities. On 25 January, two containers with a methane-hydrogen fraction caught fire at the Ufa plant, and the blaze was extinguished in the morning of 26 January. The plant's customers said the fire was not critical for polymer production. PP production has been operating normally, whereas the LDPE production has temporarily reduced its capacity utilisation, thus, production of 158 grade polyethylene (PE) was suspended.
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,220,640 tonnes in 2020, up by 2% year on year. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, exluding producers' inventories as of 1 January, 2020).
Rosneft became Russia's largest publicly traded oil company in March 2013 after the USD55 billion takeover of TNK-BP, which was Russia’s third-largest oil producer at the time.